Gold is on track to post its second week of gains since the New Year. A recent lull in US job data has given gold yet another boost, due to worries of the Federal Reserve making a preemptive call to begin tapering. Here are some of the top items this week affecting the gold market.
The NFP Report – Job Data
NFP stands for non-farm payroll. This represents the number of paid workers in the US outside of farm employees and government employees, as well as nonprofit organizations. Payrolls rose by only 74,000 in December, which is well below the projected 196,000 forecasted by economists. Unemployment fell 0.3% to 6.7%, but this was not enough of a change to balance out the bad news from the NFP report.
Gold and the Federal Reserve
This week’s weak job data is causing worry that the Federal Reserve may have made the call to taper the $85 billion per month bond buying program too soon. Although it was a small pull back of only $10 billion per month, investors still have cause for concern. All the while, this is good news for the yellow metal and other precious metals in general. Spot gold rose as much as 1.4% on Friday after the NFP release.
Further Tapering and Gold
One reason why this NFP report is so important has to do with the Fed making any decision to taper the stimulus even further. Reports like these are vital to the pace of which the Fed will continue tapering. Payroll and unemployment reports will need to stay positive for many months to come before the bond buying program reaches zero. For investors looking to buy gold bullion – this is good news.
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